618 drove a sales rebound and destocking progressed, but rising costs leave second-half demand risks unresolved

Overview

The report tracks China smartphone retail sales, vendor shipments, inventory, price bands, brand share, mobile SoC share and display technology penetration in June 2026. The 618 promotion led to a clear single-month recovery in demand, and Android brands advanced destocking by lowering shipments and increasing promotions, but inventories have not yet returned to normal. High memory costs are compressing low-end handset supply and driving handset price increases, leading the report to remain cautious on end demand in the second half of 2026 and in 2027.

Core views

The demand rebound was mainly driven by promotions rather than a trend recovery in the industry. Apple continues to gain year-on-year share thanks to stronger cost and pricing capability; Huawei's sales rebounded strongly, but its lag in advanced processes and higher chip costs limit its price competitiveness; Xiaomi's premiumization and memory price increases jointly dragged on sales. In mobile SoCs, MediaTek remains resilient by relying on the RMB2,000 to 4,000 price band and share gains at Xiaomi and Honor, but its smartphone business still faces pressure from mid-to-low-end demand. The report expects the China smartphone market to decline 15% year-on-year for full-year 2026.

Analysis framework

The report uses CINNO China market retail sales data to measure end demand, uses CATR vendor shipment data to assess channel inventory, and adjusts for an approximately 5% historical scrappage discrepancy; it then segments the market by price band, brand, SoC supplier and display technology, combining ASP, share and inventory changes to form supply-chain and stock-specific investment judgments.

Methodology notes

• Demand and inventory analysisComparison of CINNO retail sales and CATR vendor shipments

  Retail sales represent end sales, while vendor shipments represent channel replenishment; inventory changes are judged through the difference between the two.

  The report adjusts for a possible approximately 5% scrappage impact in the CATR data. After adjustment, June vendor shipments were below retail sales, especially among Android brands, indicating that channels are actively destocking.

• Market segmentation analysisSmartphone price-band breakdown

  Observes demand elasticity, product mix and brand competition across low-end, mid-end, high-end and flagship price ranges.

  The main ranges include below RMB2,000, RMB2,000 to 5,000 and above RMB5,000, with further tracking of the RMB4,000 to 5,999 sub-flagship and not less than RMB6,000 flagship markets.

• Supply-chain share analysisBrand and mobile SoC cross-share tracking

  Combines brand sales mix with changes in Qualcomm, MediaTek, HiSilicon and UNISOC share to assess chip supplier competitiveness.

  MediaTek has kept its year-to-date share stable by relying on the mid-end price band and share gains at Xiaomi and Honor customers; UNISOC's share in China remains below 1%, and the market continues to show a highly concentrated competitive landscape.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Apple (AAPL)

  Core name for demand in China's high-end smartphone brands and supply chain

  Strengths

  Does not rely on the low-end market, has stronger pricing and promotional flexibility, and June shipments and unit share continued to grow year-on-year.

  Weaknesses

  May discounts may have pulled forward some demand, and June market share narrowed month-on-month.

  Comparison

  Compared with Huawei, Apple uses more advanced-process chips and has greater room for price competition; compared with other Android brands, it has lower exposure to weak low-end demand.

  Risks

  Rising memory costs, demand pull-forward, limited flagship market growth and competition from Chinese brands.

• MediaTek (2454.TT)

  China Android smartphone mobile SoC supplier and AI ASIC beneficiary

  Strengths

  Gained share in the RMB2,000 to 4,000 price band and among Xiaomi and Honor customers, with rapid growth in AI ASIC and TPU revenue.

  Weaknesses

  Has relatively high exposure to mid-to-low-end smartphones and is vulnerable to memory price increases and end-demand contraction.

  Comparison

  Its year-to-date share performance is better than Qualcomm's, and AI business growth can offset weakness in the smartphone business.

  Risks

  Insufficient sustainability of overseas high-end handset expansion, SoC price increases further undermining demand, and pressure on the smartphone product mix.

• Xiaomi (1810.HK)

  China Android handset brand

  Strengths

  The share of models above RMB4,000 rose month-on-month to 22%, and 12-month rolling ASP increased 7% year-on-year.

  Weaknesses

  June shipments declined 18% year-on-year, market share fell to 12.9%, and both high-end and low-end models declined significantly in the first half of 2026.

  Comparison

  In the high-end market, it faces more aggressive promotional competition from both Apple and Huawei.

  Risks

  Premiumization leading to lower sales elasticity, memory price increases, low-end market contraction and overseas high-end expansion falling short of expectations.

• Huawei

  China high-end and upper-mid-end smartphone competitor

  Strengths

  June shipments increased 54% both month-on-month and year-on-year, and domestic SoCs helped it regain high-end market share.

  Weaknesses

  High-end handset sales were flat month-on-month, and higher chip and memory costs limit price competitiveness.

  Comparison

  SMIC's non-EUV N+3 process lags the advanced EUV process used in Apple's flagship models, and structural cost and performance disadvantages remain.

  Risks

  Advanced-process capacity, weaker demand for the Pura 90 series, and inability to expand sales through aggressive price cuts.

• Qualcomm (QCOM)

  High-end Android mobile SoC supplier

  Strengths

  Business diversification trend is clear, and June unit share rebounded by 1.8 percentage points month-on-month.

  Weaknesses

  Year-on-year share losses were significant, and it still faces near-term smartphone memory, margin and Apple-related pressure.

  Comparison

  Its year-to-date China market share resilience is weaker than MediaTek's.

  Risks

  Processor price increases undermining end demand, Apple's in-house substitution and Android market decline.

• Luxshare, Largan and Sunny Optical

  Smartphone component supply chain

  Strengths

  Luxshare and Largan are expected to be relatively more resilient thanks to higher Apple exposure and progress in AI-related products.

  Weaknesses

  Overall, they are still affected by declining smartphone demand and customer product cycles.

  Comparison

  The report believes Luxshare and Largan should be more resilient than Sunny Optical this year.

  Risks

  Apple demand falling short of expectations, Android market weakness, and ASP and margin pressure.

• Novatek (3034.TT)

  OLED display driver IC supplier

  Strengths

  OLED products help it defend against Chinese competitors, and it can seek growth through Apple and Samsung share and touch integration.

  Weaknesses

  OLED penetration in China smartphones is already close to 90%, leaving limited incremental room.

  Comparison

  Peaking penetration may give Chinese competitors an opportunity to catch up.

  Risks

  Slowing OLED and DDIC growth, customer share gains falling short of expectations and slow foldable penetration.

Key data

• June China smartphone retail sales28 million unitsUp 62% month-on-month and 3% year-on-year
• Cumulative sales in the first half of 2026Down 7% year-on-yearThe single-month promotional rebound has not yet reversed the cumulative downtrend
• Sales changes by price bandLow-end -14%, mid-end +9%, high-end +11%All are June year-on-year changes; low-end handsets were most obviously affected by memory costs
• Channel inventory3.2 months3.9 months in May; the normal range is approximately 1 to 2 months
• Smartphone ASPUp 15% year-on-yearSupported by price increases on like-for-like models and a lower mix of low-end models
• 2026 China smartphone market forecastDown 15% year-on-yearBernstein's latest full-year forecast
• Apple June performanceShipments increased 14% year-on-year, and unit share increased 7 percentage points year-on-yearMonth-on-month share declined as competitors also promoted at the same time
• Huawei June performanceShipments increased 54% both month-on-month and year-on-yearGrowth mainly came from RMB3,000 to 5,000 models, while high-end handsets were basically flat month-on-month
• Xiaomi June performanceShipments declined 18% year-on-year, and share fell to 12.9%Share was below 14.5% in May 2026 and 16.2% in June 2025
• MediaTek and Qualcomm June unit shareIncreased by 2.1 and 1.8 percentage points month-on-month, respectivelyQualcomm's share declined 10.4 percentage points year-on-year, while MediaTek's year-to-date share was relatively stable
• MediaTek ASIC revenue forecastUS$2B, US$15B and US$22B for 2026 to 2028, respectivelyThe report believes there is upside risk to the 2028 forecast
• Display technology penetrationOLED approximately 90%, foldables below 2%OLED has limited room for further penetration, while foldables may improve after the expected launch of iPhone Foldable at the end of 2026

Impact & implications

Short-term promotions and active destocking help ease channel pressure, but inventories remain elevated, and rising costs are being passed through from components to handset prices. Premium brands and the Apple supply chain are relatively advantaged, while brands and chip suppliers with greater low-end market exposure are under pressure. MediaTek's smartphone business faces headwinds, but AI ASIC, TPU revenue and operating leverage provide important offsets; in the panel chain, peaking OLED penetration weakens industry growth elasticity, while foldables remain too small in the short term to make a significant contribution.

Risks

• The 618 promotion may only have pulled forward demand, creating a risk of sales declines in subsequent months.
• Memory and processor SoC price increases may further undermine end demand in the second half of 2026 and in 2027.
• Although inventory has declined, 3.2 months remains above the normal range of 1 to 2 months.
• Better-than-expected upstream foundry and component results may stem from early inventory build, with real pressure potentially delayed until the second half of 2026 and the first half of 2027.
• Apple and Huawei increasing promotions in high-end and sub-flagship segments may further squeeze the revenue and share of other Android brands.
• MediaTek's overseas high-end handset expansion and AI ASIC revenue growth may fall short of expectations.
• OLED penetration is approaching saturation, foldables' near-term share is too low, and incremental growth drivers for the display supply chain are limited.

What to watch

• Whether retail sales from July to September can sustain post-618 growth, and the true demand after promotions exit.
• Whether Android brand inventory can continue to fall from 3.2 months to the normal range of 1 to 2 months.
• The extent to which memory and Qualcomm and MediaTek processor price increases are passed through to end selling prices and volumes.
• Apple and Huawei share changes in the above-RMB4,000 price band and the performance of September new products.
• Whether Xiaomi's premiumization can stabilize share and improve sales.
• MediaTek's share in Xiaomi, Honor and overseas flagship handsets, as well as upside potential for 2028 ASIC revenue.
• Whether the divergence between upstream supplier results and end sales turns into destocking pressure in the second half of 2026.
• OLED penetration, foldable share and the expected launch cadence of iPhone Foldable.